Terms and Conditions of Employment - TUPE Amendment Regulations

The Transfer of Undertakings
Regulations (or TUPE for short) have been with us since 1981. They
were amended in 2006 and the Government is making further changes
which it has published this week.

TUPE exists to ensure that the
rights of employees are protected in the event of the sale of a
business or in contracting-out situations, in other words when a
company loses a contract - e.g. a cleaning contract - to another
contractor. It can also apply when an employer takes a contract
back in-house. Contracting-out and contracting-in situations are
called 'Service Provision Changes' in the regulations.

It is unlawful for the employer to
dismiss employees for a reason connected with the transfer or
simply because it does not want to take the incoming staff on.
It can dismiss in certain circumstances but only where there is an
'economic, technical or organisational' reason entailing changes in
the workforce. This may be the case when an employer has to make
redundancies. Contractual variations are also prohibited.

The transferor (the employer losing
the business or contract) and the transferee (the employer
acquiring the business or contract) both have an obligation to
inform their own employees about the transfer and consult with
employees in appropriate circumstances. If either the transferor or
the transferee is intending taking 'measures' or dismissals then it
also must consult with its employees about ways of avoiding the
dismissals as well as other matters.

The transferor has obligations to
provide the transferee with information about its employees called
Employee Liability Information. The transferee has an obligation to
inform the transferor of any measures (dismissals) that it intends
to make.

The new regulations will be amended
to allow for contractual variations if the reason for the variation
is the transfer but the contract allows for it. It is not clear
whether this means that a party will be able to rely upon a general
flexibility clause in a contract of employment. Arguably it woud be
able to do this in any event.

Changes to the workforce
entailing a change to the place of work, will be permitted on the
grounds of redundancy even if this is because of the
transfer. In practical terms, it is quite often the case that
a transferee will take a contract over but require the employees to
work from a different location. Previously this would have amounted
to a fundamental change to the terms of employment giving rise to
unfair dismissal. The change will mean that redundancies
arising out of a change of location will not be unfair.
The is good news for transferees.

The transferor will now have to
provide employee liability information no later than 28
days before the transfer, whereas the previous period was 14
days but this only applies in respect of transfers taking place
three months after the regulations come into force.

The most notable change is
to the consultation requirement. The new regulations will
allow the transferee to consult employees, including transferring
employees, before the transfer. This is a significant departure and
whilst in practice this already happens in some cases, the
procedures in the new regulations are cumbersome as it is unclear
when the consultation should commence.